Myth: Market value will always be the same as the assessed value of the property.
Reality: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby houses are prime examples of why there might be a differential in price.
Myth: The opinion of value of a home will be different depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter of for whom the appraisal is created.
Myth: Market value should mirror replacement cost.
Reality: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under pressure from any external group to purchase or sell. If the home were reconstructed, the dollar amount necessary to do so would set the replacement cost.
Myth: There are specific ways that appraisers use to determine the cost of a house, like the price per square foot.
Reality: Appraisers make a comprehensive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: In a strong economy - when the sales prices of homes in a given area are found to be increasing by a certain percentage - the prices of individual houses in the area can be expected to rise by that same percentage.
Reality: Any value an appraiser derives in regards to a particular home is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the property itself. This is true in strong economic times as well as bad.
Myth: You can often find what a property is worth simply by looking at the exterior.
Reality: Property value is concluded by a number of variables, including location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived simply by inspecting the home from the exterior.
Myth: Since you're the one funding for the appraisal when applying for your loan to buy or refinance real estate, you own the provided appraisal report.
Reality: Legally, the document is owned by the lending company unless the lender releases their interest in the appraisal. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be provided with one by their lender.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the necessities of their lending company.
Reality: It is almost imperative for home buyers to read a copy of their appraisal report so that they can verify the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as it contains an exorbitant amount of data - including, but certainly not limited to the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the area.
Myth: The only reason someone would hire an appraiser is if a house needs its value assessed in a lender-based sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and do perform a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You shouldn't need to get an appraisal if you have had a home inspection.
Reality: A home inspection report has a completely different purpose than an appraisal. The point of an appraisal report is to form an opinion of market value during the appraisal process and the production of the appraisal. House inspectors will write a report that will determine the condition of the home and its major components and possible damage.
